Travel Insurance: Do You Need It?

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It's always good to stay on the safe side while planning a vacation, but do you really need extra insurance? Most insurance professionals advise clients to purchase travel insurance for a lengthier, costlier trip, such as a cruise to the Greek Islands.

However, if you're driving to the beach or mountains for a long weekend, your homeowner, renter, or auto insurance is normally sufficient to cover the loss of personal items. Keep in mind, though, that your premiums may go up if you make a claim on a plan where only your belongings are covered -- not medical costs or cancelled-trip fees. The best advice is to weigh your investment in a vacation and if it's significant, you will want to protect it like any other major financial endeavor.

What Kind of Plan Should You Buy?There are many plans on the market today, and some can be confusing. It's always a good idea to ask someone you trust, such as your primary insurance provider, about what supplemental plan will work best with your existing insurance.

For example, you should find out exactly what is covered under your existing medical plan, particularly if you're traveling outside the United States. Domestic health-care providers usually don't cover expenses incurred outside of the country, even in U.S. territories such as Puerto Rico.

Primary vs. SecondarySupplemental medical plans can be purchased to augment your current insurance, and are particularly recommended for the elderly, those with a history of medical problems, or those who are naturally accident-prone. Some companies offer primary policies for specific time frames, which will pay immediately if something goes wrong.

Secondary policies take effect only after your primary (i.e. existing health or homeowners) insurance is exhausted, which can leave a traveler cash-strapped while waiting for deductibles to be repaid. Also, it is your responsibility to file all receipts and document every transaction. This is one reason primary policies are typically more expensive.

Trip-Cancellation PoliciesMany travelers breathe easier after booking an expensive trip when they purchase a trip-cancellation policy. These are popular with domestic travelers, aren't prohibitively expensive, and cover nonrefundable expenses in the event of bad weather (for example, planning a trip to the Caribbean during hurricane season) or other emergency situations such as a death in the family or sudden illness.

Whatever policy you decide on, it's best to purchase it as early as possible as insurance providers usually require plans to be purchased within a short timeframe of the initial deposit for the trip. Also be sure all of your specific needs are covered, and remember to read the fine print.